option writer

Option writer

Option Writer

One who originally sells an option contract. In exchange for the premium, the option writer takes on an obligation to buy or sell (depending on the type of option) the underlying asset at the discretion of the option holder. For example, in a call, the option writer must sell the underlying asset to the option holder if the holder decides to exercise the option. If the option writer does not already have a long position in the underlying asset, he/she must obtain one so as to sell the position and fulfill the contract.

option writer

The seller of a call option or a put option in an opening transaction. The option writer receives a premium and incurs an obligation to sell (if a call is sold) or to purchase (if a put is sold) the underlying asset at a stipulated price until a predetermined date. See also writing.

All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional.